WHO WANTS TO MAKE A DEAL? HDZ LOOKS FOR COALITION

1. (C) DESPITE HIS OVERWHELMING VICTORY IN THE NOVEMBER 23
PARLIAMENTARY ELECTION, HDZ PRESIDENT IVO SANADER MAY HAVE TO
WORK OVERTIME TO FORM A COALITION. THE HDZ WON 66 OUT OF 152
SEATS IN THE NEXT PARLIAMENT, MAKING 77 THE "MAGIC NUMBER"
FOR A GOVERNMENT PROPOSED BY IVO SANADER TO WIN A VOTE OF
CONFIDENCE. WHILE WE EXPECT SANADER WILL BE ABLE TO CUT THE
NECESSARY BACK-ROOM DEALS TO MAKE UP THIS ELEVEN-SEAT
SHORTFALL, IT MIGHT TAKE MORE TIME THAN HE ORIGINALLY
EXPECTED. IT MAY BE AS LATE AS DECEMBER 5 BEFORE PRESIDENT
MESIC FORMALLY NAMES SANADER AS THE PM-DESIGNATE, AND
THEORETICALLY IT COULD BE EVEN LATER. SANADER WOULD NOT
BECOME PRIME MINISTER UNTIL LATE DECEMBER AT THE EARLIEST.
END SUMMARY.



2. (C) HDZ PRESIDENT IVO SANADER HAS ALREADY TAKEN HIS
VICTORY LAP AND SDP PRESIDENT (AND FORMER PM) IVICA RACAN HAS
ALREADY CONCEDED DEFEAT AFTER THE NOVEMBER 23 ELECTION, BUT
SANADER STILL NEEDS TO LINE UP COALITION PARTNERS TO ENSURE
HE HAS A MAJORITY IN THE NEW PARLIAMENT. BEFORE PRESIDENT
MESIC WILL OFFICIALLY NAME SANADER AS THE PM-DESIGNATE AND
INSTRUCT HIM TO FORM CROATIA'S NEXT GOVERNMENT, SANADER MUST
DEMONSTRATE THAT HIS PROPOSAL WILL PASS A VOTE OF CONFIDENCE.




3. (C) THE NUMBER OF SEATS IN CROATIA'S PARLIAMENT IS NOT
FIXED BEFORE ELECTIONS. PARLIAMENTARY SEATS ARE AWARDED TO A
DISTRICT MADE UP OF OUT-OF-COUNTRY VOTERS (THE "DIASPORA
DISTRICT") BASED ON VOTER TURNOUT. ENOUGH DIASPORA VOTERS
TURNED OUT ON NOVEMBER 23 TO SEAT FOUR MPS, BRINGING THE
TOTAL NUMBER OF MEMBERS IN CROATIA'S NEXT PARLIAMENT TO 152.
THAT MEANS SANADER NEEDS 77 VOTES TO WIN A VOTE OF CONFIDENCE
FOR HIS GOVERNMENT.



4. (C) SANADER HAD EXPECTED TO BE ABLE TO RELY ON THE
SUPPORT OF A GROUPING OF THE HSLS/DC, BUT THOSE PARTIES FARED
FAR POORER THAN EXPECTED ON ELECTION DAY AND TOGETHER WON
ONLY THREE SEATS. THE HDZ TOLD THE AMBASSADOR ON NOVEMBER 24
(REF) THAT THE HDZ WOULD SEEK TO MAKE A DEAL WITH THE
CROATIAN PEASANTS' PARTY (HSS) TO AVOID HAVING TO FORM A
GOVERNMENT WHICH WOULD INCLUDE THE RIGHT-WING CROATIAN PARTY
OF RIGHT (HSP). THE HSS HAS ALREADY INDICATED THAT IT IS
WILLING TO DEAL, BUT WITH ONLY TEN SEATS, THE HDZ WILL HAVE
TO MAKE AN OFFER TO THE HSLS/DC AS WELL.



5. (C) HSS PRESIDENT ZLATKO TOMCIC WILL TRY TO DRIVE A HARD
BARGAIN. WHILE THE HSS WAS A RELIABLE COALITION PARTNER FOR
RACAN'S SDP, IT OPPOSED SOME ECONOMIC REFORMS AND BLOCKED ANY
AGGRESSIVE PRIVATIZATION POLICY. SINCE THE ELECTION, TOMCIC
HAS MADE PUBLIC THE HSS CRITERIA FOR JOINING A COALITION: A
MORE DELIBERATE PACE OF ECONOMIC REFORM WITH A STRONGER STATE
ROLE; WE WILL HAVE TO WAIT AND SEE HOW FAR SANADER IS WILLING
TO BEND. THE HSP, HOWEVER, HAS BEEN PUBLICLY SIGNALING ITS
WILLINGNESS TO COMPROMISE ON ANY ISSUE -- EVEN COOPERATION
WITH ICTY -- JUST TO GET INTO GOVERNMENT. THE HDZ WELL
UNDERSTANDS THAT THE HSP'S NATIONALIST BAGGAGE WOULD NOT HELP
CROATIA'S ASPIRATIONS FOR EU AND NATO MEMBERSHIP. BUT IF
SANADER CANNOT MAKE A DEAL WITH TOMCIC, HE WILL NEED EVERY
ONE OF THE HSP'S EIGHT SEATS AND ALL THREE FROM HSLS/DC TO
HAVE A ONE-VOTE MAJORITY IN PARLIAMENT.



6. (C) IN A NOVEMBER 25 MEETING WITH THE DCM, PRESIDENT
MESIC'S ADVISER IVICA MASTRUKO TOLD US THAT MESIC WOULD BEGIN
FORMAL CONSULTATIONS WITH POLITICAL LEADERS ON NAMING SANADER
AS PM-DESIGNATE BY THE END OF THIS WEEK OR EARLY NEXT WEEK.
MASTRUKO SAID THAT MESIC WILL INSIST ON SEEING SIGNED
AGREEMENTS FROM SANADER'S FUTURE PARTNERS PLEDGING THEIR
SUPPORT. MASTRUKO WAS CERTAIN THAT SANADER WOULD EVENTUALLY
BE NAMED AS PM-DESIGNATE, BUT REJECTED HDZ ASSERTIONS THAT
THE ETHNIC SERB PARTIES MIGHT SERIOUSLY CONSIDER ENTERING A
FORMAL COALITION TO SUPPORT SANADER.



7. (C) "OFFICIAL" RESULTS OF THE NOVEMBER 23 ELECTION MAY BE
DELAYED. BECAUSE ONE EXTRA, UNACCOUNTED-FOR BALLOT WAS FOUND
IN A BALLOT BOX, ELECTIONS WILL BE REPEATED IN ONE DISTRICT
OUTSIDE OF ZAGREB ON NOVEMBER 30. THE RESULT OF THIS RE-VOTE
CAN IN NO WAY AFFECT THE OUTCOME OF THE ELECTION, BUT THE
OVERALL RESULTS MAY NOW NOT BECOME OFFICIAL UNTIL AS LATE AS
DECEMBER 5. MASTRUKO SAID THE PARLIAMENT'S FIRST SESSION --
WHERE SANADER AND HIS GOVERNMENT WOULD RECEIVE AN OFFICIAL
VOTE OF CONFIDENCE -- COULD POSSIBLY TAKE PLACE IN LATE
DECEMBER OR MORE PROBABLY IN EARLY JANUARY.
FRANK

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